The majority of US health insurers are expected to post year-over-year revenue and earnings per share growth for the 2023 fourth quarter even as most see sequential drops, according to an S&P Global Market Intelligence analysis of sell-side analyst forecasts.

Of the nine largest publicly traded US health insurers, all but two are expected to report higher EPS on a year-over-year basis during the fourth quarter, capping off a year punctuated by ongoing Medicaid redeterminations and high Medicare usage.

Despite concerns throughout 2023 about higher-than-anticipated usage of Medicare Advantage — expanded offerings of federally subsidized health plans primarily for seniors — utilization is expected to stabilize in 2024, according to J.P. Morgan analysts.

Medicare, Medicaid woes continue

Centene Corp. is the sole managed care insurer expected to see both a sequential and year-over-year decline in EPS amid a quarter with a drop in Medicare revenue and Medicare Advantage membership, according to comments made by Centene CEO Sarah London during a J.P. Morgan investor conference Jan. 9.

"We still expect to be down roughly $4 billion in revenue and mid-teens plus in membership, but are very pleased with how that team executed on our strategy, including an uptick in the percentage of duals in the membership base, which was consistent with our plan and our stated strategic focus with that book of business," London said.

The only insurer estimated to have no change in their EPS either year-over-year or sequentially is Alignment Healthcare Inc., which logged an 18-cent-per-share loss in both the third and fourth quarters of 2023 as well as in the fourth quarter of 2022.

Medicare Advantage growth is a focus area for Alignment Healthcare, according to comments made by CEO John Kao during a Jan. 10 J.P. Morgan investor conference. During the annual enrollment period ending Jan. 1, Kao said Alignment had 155,500 members, up about 44% year over year, with 82% of that growth coming from plan switchers in the marketplace.

During the second quarter, multiple large health insurers indicated higher-than-expected usage of Medicare Advantage. The utilization was primarily related to surgeries that had been delayed amid the COVID-19 pandemic. Although elevated from pandemic levels, surgeries have largely remained in line with expectations, according to various managed care executives.

While most managed care insurers noted pressure from Medicare utilization during the second half of 2023, utilization is expected to stabilize heading into 2024, according to a research note from J.P. Morgan analysts.

"Medicare Advantage utilization is expected to stabilize relative to 2H23 levels but will likely run above several companies' pricing assumptions, resulting in a [medical loss ratio] headwind," the analysts wrote.

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Redetermination redux

Meanwhile, various managed care insurers are contending with ongoing and varied Medicaid redeterminations, the annual process by which states determine which individuals qualify for state and federally subsidized health insurance.

Centene's Medicaid membership roll off during the 2023 fourth quarter is expected to be heavy, London said during the recent J.P. Morgan conference. The insurer is still in the process of working with states to deal with outstanding acuity and retro rate adjustments, London said.

"I think that is going to be normal course as we go into 2024 and just continue to work on that collaboration with our state partners to ensure that the acuity adjustments that we are receiving are matching what we observe in the member experience," London said.

Revenue picture mixed

The majority of the nine largest publicly traded US managed care insurers are expected to see year-over-year growth in revenue, but only Oscar Health Inc. is forecast to also log sequential growth between quarters.

Oscar Health's revenue is expected to rise to $1.46 billion from the $1.44 billion reported during the third quarter. On an annual basis, the insurer's revenues are predicted to increase 9.9% from the fourth quarter of 2022.

Among the nine largest publicly traded US managed care insurers, only Clover Health Investments Corp. is expected to report a year-over-year revenue drop. The embattled insurance technology (insurtech) company's revenue is expected to decrease 1.7% from the third quarter and 47.3% year over year, the largest annual decrease in revenue from the prior year quarter.

Clover Health was one of several insurtechs that faced difficulties in 2023 amid a changing market. After announcing a reverse stock split and an authorized share reduction, the insurer walked back the changes in August 2023. The decision came after Clover Health was notified that it regained compliance with the Nasdaq's minimum bid price requirement on July 31.

Centene is expected to log the highest sequential decrease in revenues, declining 6% from the third quarter.

The earnings season for managed care will kick off Jan. 12 with UnitedHealth Group Inc.